Millennium bcp earnings release as at 30 September 2018

Transcription

1 8 November 2018 Millennium bcp earnings release as at 30 September 2018 Profitability and efficiency Improved profitability supported by the strong performance in Portugal and sustained growth of the international activity Net profit of Euro million in the first nine months of 2018, representing an 93.1% increase from Euro million in the same period the previous year. Earnings from the activity in Portugal improved significantly: contribution of Euro million in the first nine months of 2018, compared to Euro 0.8 million in the same period of Earnings from the international activity increased 7.2% from Euro million in the first nine months of 2017 to Euro million in the same period of Asset quality Improved credit quality, with significant NPE reduction and strengthened coverage Relevant NPE reduction: Euro -1.8 billion from 30 September 2017 (of which Euro -1.6 billion in Portugal). Reinforcement of NPE coverage: coverage by impairments of 51% (42% as at 30 September 2017) and overall coverage* of 107% (103% as at 30 September 2017). Business performance Strong business dynamics; expansion of Customer base; capture of digital Customers Rating upgrade Stress tests Expansion of activity in Poland Increasing business volumes, with total loans up by approximately Euro 700 million and performing loans up by Euro 1.0 billion, both in the third quarter of Added 294,000 active Customers from 30 September 2017, partially supported by digital development in Portugal. Recent rating actions (Standard & Poor s and Moody s) recognise Millennium bcp s improvement over the last years. Good performance on stress tests when compared to the average for banks tested by EBA. Agreement for the acquisition of Eurobank strengthens the position of Bank Millennium in Poland and provides the opportunity for strong value added. *By loan-loss reserves, expected loss gap and collaterals. 1/23 BANCO COMERCIAL PORTUGUÊS, S.A., a public company (sociedade aberta) having its registered office at Praça D. João I, 28, Oporto, registered at the Commercial Registry of Oporto, with the single commercial and tax identification number and the share capital of EUR 5,600,738, LEI: JU1U6S0DG9YLT7N8ZV32 INVESTOR RELATIONS Rui Coimbra Phone investors@millenniumbcp.pt rui.coimbrafernandes@millenniumbcp.pt lmonteiro@millenniumbcp.pt MEDIA CONTACT Erik T. Burns Phone Mobile erik.burns@millenniumbcp.pt cintia.barbas@millenniumbcp.pt

2 FINANCIAL HIGHLIGHTS (1) 30 Sep Sep. 17 Change 18/17 BALANCE SHEET Total assets 73,745 72, % Loans to customers (gross) 51,150 50, % Total customer funds (2) 72,786 68, % Balance sheet customer funds 54,922 52, % Deposits and other resources from customers 53,624 50, % Loans to customers (net) / Deposits and other resources from customers (3) 89% 93% Loans to customers (net) / Balance sheet customer funds 87% 91% RESULTS Net income % Net interest income 1, , % Net operating revenues 1, , % Operating costs % Operating costs excluding specific items (4) % Loan impairment charges (net of recoveries) % Other impairment and provisions % Income taxes Current Deferred 32.0 (19.7) PROFITABILITY Net operating revenues / Average net assets (3) 3.0% 2.9% Return on average assets (ROA) 0.6% 0.4% Income before tax and non-controlling interests / Average net assets (3) 0.8% 0.5% Return on average equity (ROE) 6.0% 3.2% Income before tax and non-controlling interests / Average equity (3) 8.8% 5.6% CREDIT QUALITY Total impairment (balance sheet) / Loans to customers 6.3% 6.7% Cost of risk (net of recoveries, in b.p.) Non-Performing Exposures / Loans to customers 12.3% 15.9% Restructured loans / Loans to customers 7.7% 8.9% EFFICIENCY RATIOS (3) (4) Operating costs / Net operating revenues 45.4% 45.1% Operating costs / Net operating revenues (Portugal activity) 46.3% 45.7% Staff costs / Net operating revenues 25.9% 25.3% CAPITAL (5) Common equity tier I phased-in ratio 11.8% 13.2% Common equity tier I fully implemented ratio 11.8% 11.7% BRANCHES Portugal activity % Foreign activity % EMPLOYEES Portugal activity 7,130 7, % Foreign activity 8,656 8, % (1) Some indicators are presented according to management criteria of the Group, which descriptions and concepts are described and detailed at the glossary and at "Alternative Performance M easures" chapter, being reconciled with the accounting values published in the consolidated financial statements. (2) As at 30 June 2018, the concepts underlying the determination of off-balance sheet customer funds were adjusted to reflect the new legal and regulatory framework imposed bythe Financial Instruments M arkets Directive II (MiFID II), as well as changes implemented regarding the perimeter considered and the criteria adopted, namely with regard to the inclusion of amounts held by customers in the context of the placement of third-party products that contribute to the recognition of commissions ("assets placed with customers"). The information with reference to 30 September 2017 is presented according to the new criteria. (3) According to Instruction from the Bank of Portugal no. 16/2004, as the currently existing version. (4) Excludes specific items: negative impact of Euro 12.0 million in the first nine months of 2018, related to restructuring costs in the activity in Portugal and positive impact of Euro 23.7 million in the first nine months of 2017 related to restructuring costs and the revision of Collective Lab. Agt. also in the activity in Portugal, both in staff costs. (5) September 2018 and September 2017 include the accumulated net income of each period. September 2018 figures are estimated. 2/23

3 RESULTS AND ACTIVITY IN THE FIRST NINE MONTHS OF 2018 On 1 January 2018, IFRS 9 - Financial Instruments entered into force, replacing IAS 39 - Financial Instruments: recognition and measurement, and establishing new rules for the recognition of financial instruments, introducing relevant changes, particularly as regards the methodology for impairment calculation. The adoption of this accounting standard had an impact on the structure of the Millennium bcp financial statements compared to 31 December 2017, largely influenced by the adjustments associated with the transition, and did not materially affect the profit and loss account for the first nine months of In this context, some indicators were defined according to management criteria intended to favour comparability with financial information of prior periods. Following the guidelines on Alternative Performance Measures published by the European Securities and Markets Authority (ESMA), the relevant indicators that allow a full understanding of the evolution of the Group's economic and financial position are detailed at the end of this document, being reconciled with the accounting values published in the consolidated financial statements. RESULTS The net income of Millennium bcp reached Euro million, in the first nine months of 2018, an 93.1% increase from Euro million registered in the same period of the previous year, driven strongly by the performance of the activity in Portugal, also benefiting from the favourable performance of the international activity. In the activity in Portugal, net income increased significantly compared to Euro 0.8 million achieved in the first nine months of 2017, totalling Euro million in the same period of 2018, highlighting the significant reduction of impairments and provisions. In the international activity, net income in the first nine months of 2018 stood at Euro million increasing 7.2% from Euro million registered in the same period of the previous year, benefitting from the favourable performance of the subsidiaries in Poland and Mozambique, despite the lower contribution from Banco Millennium Atlântico. Net interest income totalled Euro 1,052.8 million in the first nine months of 2018, comparing favourably to Euro 1,023.2 million in the same period of the previous year. In the activity in Portugal, net interest income stood at Euro million in the first nine months of 2018 compared to Euro million accounted in the same period of the previous year, benefiting from the reduction of the cost of funding, namely the decrease of the cost of issued debt and the decreasing trend in costs for term deposits, despite the reduction in the interest from loans and debt securities portfolios. In the international activity, net interest income reached Euro million in the first nine months of 2018, reflecting a 5.9% increase from the Euro million registered in the same period of 2017, mainly due to the performance of the subsidiary in Poland and also, to a lesser extent, to the subsidiary in Mozambique. Net interest margin in the first nine months of 2018 stood at 2.20%, compared to 2.17% (2.19%, excluding the impact from the cost of CoCos) in the same period of /23

4 AVERAGE BALANCES 30 Sep Sep. 17 Amount Yield % Amount Yield % Deposits in banks 2, , Financial assets 13, , Loans and advances to customers 47, , INTEREST EARNING ASSETS 63, , Non-interest earning assets 9,943 10,571 73,065 72,631 Amounts owed to credit institutions 7, , Resources from customers 52, , Debt issued 2, , Subordinated debt 1, INTEREST BEARING LIABILITIES 64, , Non-interest bearing liabilities 1,955 2,166 Shareholders equity and non-controlling interests 6,889 6,619 73,065 72,631 Net interest margin Net interest margin (excl. cost of CoCos) 2.19 Note: Interest related to hedge derivatives was allocated, in September 2018 and 2017, to the respective balance sheet item. Net commissions evolved positively, from Euro million in the first nine months of 2017 to Euro million in the same period of This evolution mainly benefited from the favourable performance of the activity in Portugal, where net commissions rose 4.4%. The evolution of net commissions in the first nine months of 2018 reflects the increase of both banking and market related commissions, which improved 2.4% and 6.5% respectively, from the figures booked in the same period of the previous year. Net trading income totalled Euro 89.6 million in the first nine months of 2018, compared to Euro million accounted in the same period the previous year, conditioned by the performance of the activity in Portugal, mainly due to loan sales. Other net operating income, which, among others, includes the costs associated with mandatory contributions as well as with the Resolution Fund and the Deposit Guarantee Fund in both Portugal and international activity, was negative by Euro 90.3 million in the first nine months of 2018, comparing favourably to the also negative Euro 97.0 million accounted in the same period of the previous year, induced by the performance of the activity in Portugal. 4/23

5 In the activity in Portugal, other net operating income stood negative by Euro 45.6 million in the first nine months of 2018, showing an improvement compared to the also negative Euro 53.7 million registered in the same period of the previous year, mainly benefiting from the increased income associated with non-current assets held for sale, despite the increase of costs related to mandatory contributions. In the first nine months of 2018, these contributions totalled Euro 66.5 million compared to Euro 57.9 million in the same period of the previous year. In the international activity, other net operating income was negative by Euro 44.7 million in the first nine months of 2018, which compares with the also negative Euro 43.3 million registered in the same period of the previous year. This evolution was conditioned by the increase of mandatory contributions, which stood at Euro 55.7 million in the first nine months of 2018 compared to Euro 53.2 million in the same period of 2017, supported by the Polish subsidiary. The performance of other net operating income also reflects the recognized gains related to real estate disposal and indemnity received in the first nine months of 2017 by the Polish subsidiary and, in 2018, the higher income from the subsidiary in Mozambique. Dividends from equity instruments, which comprise dividends received from investments classified as financial assets at fair value through other comprehensive income and as financial assets held for trading, together with equity accounted earnings, were up 23.9% from the amount achieved in the first nine months of 2017, totalling Euro 72.5 million in the same period of OTHER NET INCOME 9M 18 9M 17 Change 18/17 NET COMMISSIONS % Banking commissions % Cards and transfers % Credit and guarantees % Bancassurance % Current account related % Other commissions % Market related commissions % Securities % Asset management % NET TRADING INCOME % OTHER NET OPERATING INCOME (90.3) (97.0) 6.9% DIVIDENDS FROM EQUITY INSTRUMENTS % EQUITY ACCOUNTED EARNINGS % TOTAL OTHER NET INCOME % Other net income / Net operating revenues 35.6% 35.8% 5/23

6 Operating costs, excluding the effect of specific items*, stood at Euro million in the first nine months of 2018, compared to Euro million in the same period of the previous year. In the activity in Portugal, operating costs, not considering the impact of specific items, totalled Euro million in the first nine months of 2018, increasing 2.1% from the Euro million accounted in the same period of This evolution was determined by the growth of staff costs mainly influenced by the salary replacement that occurred from July 2017 as well as, to a lesser extent, the higher level of depreciation costs, despite other administrative cost savings. In the international activity, operating costs stood at Euro million in the first nine months of 2018, increasing 5.4% from the amount accounted in the same period of the previous year, mainly due to the performance of the Polish subsidiary. Staff costs, excluding the impact of specific items, totalled Euro million in the first nine months of 2018 showing a 4.9% increase from the same period of previous year, justified by the higher level of costs in both the activity in Portugal and the international activity. In the activity in Portugal, staff costs excluding the impact of specific items, totalled Euro million in the first nine months of 2018, representing an increase of 4.0% from the amount of the same period of This increase was particularly influenced by the decision of the Board of Directors of the Bank to end, in advance, with effect from 30 June 2017, the temporary salary adjustment that had been in force since July 2014, following the full reimbursement of CoCos, despite the positive impact associated with the decrease of 151 employees, between the end of the third quarter of 2017 and In the international activity, staff costs stood at Euro million in the first nine months of 2018, showing an increase of 6.5% from the same period of the previous year, mainly due to the performance of the Polish subsidiary. Other administrative costs amounted to Euro million in the first nine months of 2018, in line with the amount accounted in the same period of the previous year (Euro million), with the decrease of costs in the activity in Portugal offset by the growth of costs in the international activity. The reduction of other administrative costs in Portugal, -2.1% compared to the amounts registered in the first nine months of 2017, was driven by cost containment measures, namely the resizing of the distribution network (589 branches as at 30 September 2017, compared to 568 branches at the end of September 2018). The evolution of other administrative costs in the international activity, reflects the higher level of costs reported by the subsidiaries in Poland and in Mozambique, compared to the amounts accounted in the first nine months of Depreciation costs totalled Euro 42.9 million in the first nine months of 2018, which compares to Euro 39.7 million registered in the same period of the previous year, mainly reflecting the increase in depreciation costs in the activity in Portugal, in particularly those related to software and IT equipment, but also, to a lesser extent, in the international activity, mainly due to the subsidiary in Mozambique. * Negative impact of Euro 12.0 million in the first nine months of 2018, related to restructuring costs in the activity in Portugal and positive impact of Euro 23.7 million in the first nine months of 2017, related to restructuring costs and the revision of Collective Lab. Agt, also in the activity in Portugal, both in staff costs. 6/23

7 OPERATING COSTS 9M 18 9M 17 Change 18/17 Staff costs % Other administrative costs % Depreciation % OPERATING COSTS EXCLUDING SPECIFIC ITEMS % OPERATING COSTS % Of which: Portugal activity (1) % Foreign activity % (1) Excludes the impact of specific items. Impairment for loan losses (net of recoveries) showed a 26.5% reduction from Euro million accounted in the first nine months of 2017, totalling Euro million in the same period of In this evolution, it is worth noting the decrease in the activity in Portugal, but also the contribution of the international activity, which benefited from the favourable performance of all subsidiaries, highlighting the contribution of the operation in Poland and, to a lesser extent, the operation in Mozambique. The Group's cost of risk (net) showed a favourable change, falling from 120 basis points in the first nine months of 2017 to 88 basis points in the same period of Other impairment and provisions showed a significant decrease from Euro million accounted in the first nine months of 2017, to Euro 94.2 million in the first nine months of 2018, determined essentially by the lower level of provisions required by other financial and non-financial assets of the Group, namely those related to real estate, despite the strengthening of provisions to guarantees and other commitments. Income tax (current and deferred) totalled Euro million in the first nine months of 2018, compared to Euro 63.1 million obtained in the same period of the previous year. Income tax includes, in the first nine months of 2018, current tax costs of Euro 77.6 million (cost of Euro 82.8 million in the same period of 2017) and deferred tax costs of Euro 32.0 million (income of Euro 19.7 million in the first nine months of 2017). 7/23

8 BALANCE SHEET Total assets rose to Euro 73,745 million as at 30 September 2018, compared to Euro 72,990 million registered at the same date of the previous year, reflecting essentially the growth of securities and loans to customers portfolios, partially offset by the reduction of loans and advances to credit institutions and of non-current assets held for sale, namely regarding foreclose assets. Loans to customers (gross) stood at Euro 51,150 million as at 30 September 2018, compared to Euro 50,754 million as at 30 September 2017, boosted by the growth of the international activity. In the activity in Portugal, loans to customers (gross) amounted to Euro 37,629 million as at 30 September 2018, comparing to Euro 37,947 million at the same date of the previous year. The evolution of loans to customers in the activity in Portugal was determined, on the one hand, by an important reduction of NPE (Euro -1.6 billion from the end of September 2017, to Euro 5.5 billion as at 30 September 2018) and, on the other hand, by the 4.2% increase of performing loans in the same period. In this context, it is worth noting the increase in new consumer and mortgage loans from the first nine months of 2017, largely supported by the significant development of digital channels in progress. In the international activity, loans to customers (gross) amounted to Euro 13,521 million as at 30 September 2018, increasing 5.6% from Euro 12,807 million in the same date of the previous year, determined by the growth in the subsidiary in Poland. The structure of the loans to customers portfolio showed identical and stable levels of diversification between the end of September 2017 and 2018, with loans to companies representing 46% of total loans to customers as at 30 September LOANS TO CUSTOMERS (GROSS) 30 Sep Sep. 17 Change 18/17 INDIVIDUALS 27,604 27, % Mortgage 23,640 23, % Consumer and others 3,965 3, % COMPANIES 23,546 23, % Services 8,882 8, % Commerce 3,511 3, % Construction 2,208 2, % Others 8,945 8, % TOTAL 51,150 50, % Of which: Portugal activity 37,629 37, % Foreign activity 13,521 12, % 8/23

9 Credit quality evolved favourably, improving the respective indicators. The ratios of overdue loans by more than 90 days, NPLs by more than 90 days and NPE as a percentage of total loans to customers saw a generalized decrease as of 30 September 2018 compared to the same date of the previous year, mainly supported by the performance of the domestic loan portfolio. At the same time, there was an increase of coverage for impairment, common to all indicators, with the reinforcement of the coverage of NPE for impairment assuming particular relevance, standing at 50.8% as at 30 September 2018, compared to 41.9% on the same date of In Portugal, the same ratio increased from 40.9% as at 30 September 2017 to 48.4% as at 30 September CREDIT QUALITY INDICATORS Stock of loans () As percentage of loans to customers Coverage by impairments 30 Sep Sep Sep Sep Sep Sep. 17 OVERDUE LOANS > 90 DAYS Group 2,462 3, % 6.1% 130.3% 108.9% Activity in Portugal 2,175 2, % 7.4% 123.4% 104.5% NON-PERFORMING LOANS (NPL) > 90 DAYS Group 3,792 4, % 9.3% 84.5% 71.6% Activity in Portugal 3,324 4, % 11.2% 80.8% 68.9% NON-PERFORMING EXPOSURES (NPE) Group 6,307 8, % 15.9% 50.8% 41.9% Activity in Portugal 5,546 7, % 18.9% 48.4% 40.9% Total customer funds (*) increased 5.5% from Euro 68,984 million booked as at 30 September 2017, reaching Euro 72,786 million at the same date of 2018, mainly benefiting from the performance of the activity in Portugal, but also from the positive performance of the international activity. The growth of customer funds reflects both, the performance of balance sheet customer funds, particularly deposits and other resources from customers, which increased 5.8% from September 2017, and of off-balance sheet customer funds, which went up 6.8% in the same period. In the activity in Portugal, total customer funds increased 5.8% comparing to Euro 50,246 million registered at the end of September 2017, reaching Euro 53,171 million as at 30 September 2018, highlighting the Euro 2,146 million growth in deposits and other resources from customers and the Euro 1,051 million increase of off-balance sheet customer funds compared to the same date of the previous year. Total customer funds in the international activity rose to Euro 19,614 million as at 30 September 2018, increasing 4.7% from Euro 18,738 million registered at 30 September 2017, based on the growth in deposits and other resources from customers, which registered an increase of 5.1%, boosted by the performance of the Polish subsidiary. (*) As at 30 June 2018, the concepts underlying the determination of off-balance sheet customer funds were adjusted to reflect the new legal and regulatory framework imposed by the Financial Instruments Markets Directive II (MiFID II), as well as changes implemented regarding the perimeter considered and the criteria adopted, namely with regard to the inclusion of amounts held by customers in the context of the placement of third-party products that contribute to the recognition of commissions ( assets placed with customers ). The information with reference to the end of September 2017 is presented according to the new criteria. 9/23

10 As at 30 September 2018, balance sheet customer funds represented 75% of total customer funds, with deposits and other resources from customers representing 74% of total customer funds. The loans to deposits ratio, in accordance with the Bank of Portugal s Instruction no. 16/2004, improved from 93% as at 30 September 2017 to 89% at the same date of The same ratio, considering on-balance sheet customers funds, stood at 87% as at 30 September 2018 (91% as at 30 September 2017). TOTAL CUSTOMER FUNDS 30 Sep Sep. 17 Change 18/17 BALANCE SHEET CUSTOMER FUNDS 54,922 52, % Deposits and other resources from customers 53,624 50, % Debt securities 1,298 1, % OFF-BALANCE SHEET CUSTOMER FUNDS 17,863 16, % Assets under management 5,291 4, % Assets placed with customers 4,151 3, % Insurance products (savings and investment) 8,421 8, % TOTAL 72,786 68, % Of which: Portugal Activity 53,171 50, % Foreign activity 19,614 18, % The securities portfolio stood at Euro 15,302 million as at 30 September 2018, compared to Euro 13,487 million posted as at 30 September 2017, representing 20.7% of total assets (18.5% at the same date of the previous year). This evolution was mainly due to the growth of the securities portfolio of the activity in Portugal, mainly from the increase in public debt portfolio, while the increase in the international activity was due to the operations in Mozambique and in Poland. LIQUIDITY MANAGEMENT The Liquidity Coverage Ratio (LCR) stood at 182% at the end of September 2018, on a consolidated basis, comfortably above the minimum requirement of 100%, supported by highly liquid asset portfolios in an amount compatible with the prudent management of the Group's short-term liquidity, having evolved favourably compared to the same date last year (158%). At the same time, the Group has a strong and stable financing base, characterized by the large share of customer deposits in the funding structure, collateralized financing and medium and long-term instruments, which enabled the stable financing ratio (NSFR; Net Stable Funding Ratio) as determined in 30 September 2018 to stand at 128% (124% as at 30 September 2017). The consolidated wholesale financing decreased, between the end of September 2017 and the end of September 2018, mainly attributable to the reduction in liquidity needs due to the decrease of the commercial gap in Portugal and to the cash flow of the activity, partially offset by the increase in the sovereign debt portfolio. The decrease in liquidity needs was mainly seen in the reduction of repo in Portugal, and incorporated an increase in the balance of subordinated loans placed with institutional investors, through an operation occurred at the end of /23

11 The net funding with the ECB stood at Euro 3.1 billion as at 30 September 2018, decreasing from Euro 3.4 billion on the same date of the last year, standing at a materially lower level than the average balance observed in The liquidity buffer with the ECB, of Euro 12.5 billion, remained in line with the amount of the previous quarter and showed a Euro 3.4 billion reinforcement compared to the same date of the previous year. Considering other assets that are highly liquid or likely to be converted into eligible collateral with the ECB in the short term, the buffer would amount to Euro 13.5 billion (Euro 10.6 billion at the end of September 2017). CAPITAL The estimated CET1 ratio as at 30 September 2018 on a phased-in and on a fully implemented basis stood at 11.8%, -140 basis points and +10 basis points, respectively, comparing to the 13.2% and 11.7% ratios recorded in the same period of 2017 and above the minimum ratios defined in the SREP(*) for 2018 (CET1 8.81%, T % and Total 12.31%). The favourable evolution of CET1 on a fully implemented basis was mainly determined by net income, partially offset by the IFRS9 adoption impact, by the deduction of irrevocable payment commitments for the Single Resolution Fund and the Deposits Guarantee Fund and by the increase of the Risk Weighted Assets. The fully implemented total capital ratio additionally benefited from subordinated bond placements in Poland and Portugal. SOLVENCY RATIOS FULLY IMPLEMENTED Own funds 30 Sep Sep. 17 Common Equity Tier 1 (CET1) 4,954 4,423 Tier 1 5,034 4,491 Total Capital 5,622 4,813 Risk weighted assets 42,108 37,910 Solvency ratios CET1 11.8% 11.7% Tier % 11.8% Total capital 13.4% 12.7% PHASED-IN CET1 11.8% 13.2% Note: The capital ratios as at September 2018 are estimated and include the positive accumulated net income. The capital ratios as at September 2017 include the positive accumulated net income. (*) Supervisory Review and Evaluation Process. 11/23

12 SIGNIFICANT EVENTS IN THE PERIOD Millennium bcp started to implement its Strategic Plan Highlights during this period include: The Board of Directors elected by the Annual General Meeting of Shareholders held on 30 May 2018 started its term of office on 23 July 2018; Announcement of the main guidelines of the Strategic Plan ; Signing of a Clearing and Settlement of Renminbi Business agreement with the Bank of China Macau, reinforcing its presence in the Chinese market; BCP confirmed in the Sustainability Index "Ethibel Sustainability Index (ESI) Excellence Europe ; A long-term strategic partnership agreement signed between Millennium bim and Insurer Fidelidade aimed at the sustained growth of the insurance sector in Mozambique; Bank Millennium has applied to the Polish Financial Supervision Authority for permission to create a mortgage bank under the name of "Millennium Bank Hipoteczny," based in Warsaw; Millennium bcp won three honors in the Global Finance Best Digital Bank Awards: "Best Consumer Digital Bank" in Portugal, Best Online Deposit, Credit and Investment Product Offerings and Best Information Security and Fraud Management in Western Europe; Millennium investment banking has been named by Euromoney magazine the Best Investment Bank in Portugal; In the 2018 edition of Newsweek s Friendly Bank ranking, Bank Millennium won in all categories. It was No. 1 in Mobile Banking ; No. 2 in Bank for Mr. Kowalski and No. 3 in Internet Banking and Mortgage Banking ; Millennium bim was recognized for the fifth time in a row for its performance in the banking sector with the Best Bank in Mozambique award, by the Euromoney magazine; Millennium bim has been recognized for its performance in the Mozambican banking sector, this time as "Best Digital Bank in Mozambique 2018" by the Global Finance magazine. 12/23

13 SUBSEQUENT EVENTS On 9 October 2018, S&P Global Ratings upgraded BCP s long-term issuer credit rating to BB from BB- and reaffirmed its short-term counterparty credit rating at B. The outlook changed to stable. On 16 October 2018, Moody s upgraded by one-notch BCP s long-term deposit and senior unsecured debt ratings to Ba3 from B1, reflecting, essentially, the upgrade of the bank s BCA to b1 from b2 and an unchanged moderate government support for BCP. On 5 November 2018, BCP informed that its subsidiary Bank Millennium announced that day that it reached an agreement for the acquisition of a 99.79% stake in Euro Bank S.A. from Societe Generale Financial Services Holding, a subsidiary of Société Générale S.A., for an estimated total consideration of 1,833 million zlotys (EUR 428 million*), implying a 1.20x P/BV (final purchase price subject to customary NAV adjustment at closing), to be paid in cash and fully financed from internal sources of Bank Millennium. The acquisition of eurobank allows Bank Millennium to strengthen its position in the Polish banking sector. Furthermore, it will increase Bank Millennium s Client base, allowing it to reach the top 6 in Polish banking by number of retail Clients, as well as boosting Bank Millennium s geographic presence to smaller cities across Poland. It represents a profitable deployment of Bank Millennium s excess capital and liquidity (without capital increase), with EPS accretion expected to reach 26% from Bank Millennium s CET1 ratio is expected to stand at 15.9% after completion, comfortably above regulatory requirements. The transaction is expected to close in the second quarter of 2019, subject to regulatory approvals, and is estimated to be earnings accretive for Millennium bcp on a consolidated basis from 2020, already including integration costs, with an approximate impact of -40 basis points on its CET1 ratio and of -30 basis points on its total capital ratio (fully implemented) expected on the date of transaction. On 5 November 2018, BCP concluded on that day, with 62.1% of the share capital represented, the Annual General Meeting of Shareholders, with the following resolutions: i) Approval of the alteration of the articles of association through the modification of number 2 of article 54 of the Bank s Articles of Association; ii) Approval of reformulation of the items of own capital with the special purpose of unequivocally reinforcing the future conditions for the existence of funds able of being classified by the regulators as distributable by means of the reduction of the amount of the share capital in 875,738, euros, without changing the existing number of shares (without nominal value) and without altering the net equity, with the consequent alteration of number 1 of article 4 of the articles of association. On 5 November 2018, BCP informed that the European Banking Authority (EBA) has published the results of the 2018 EU-wide stress test, which has involved a significant sample of banks in the European Union, with outcomes for 48 banks having been disclosed. The EBA-led stress test was conducted in articulation with the ECB. Besides the coordination of the exercise, the EBA was responsible for running the exercise for the major banks in the Euro Area. ECB has conducted a parallel stress test for other banks under its supervision, including BCP. BCP s CET1 phased-in ratio stood at 9.14% under the adverse scenario, a 384 basis points aggravation from end-2017, comparing favourably to an average 410 basis points aggravation for the 48 banks tested by EBA (300 basis points aggravation, comparing to 395 basis points, respectively, under a fully implemented basis). * /Zloty: /23

14 MACROECONOMIC ENVIRONMENT The International Monetary Fund (IMF) forecasts that the growth pace of the world economy is bound to remain robust in 2018 and The current phase of activity expansion has been, however, displaying greater disparity between the main economic blocs. Amid the developed countries the performance of the US has stood out, and amongst the emergent markets it is the commodity-exporting countries that have been more dynamic. This environment, together with the risks of a worsening of protectionist tensions and of added instability in international financial markets might jeopardise the on-going expansion trajectory of the world economy, according to the IMF. The strong performance of the North-American economy translated into a high growth pace for activity and employment, and led the Federal Reserve to raise its key interest rate in September for the third consecutive time this year (to 2.25%), and also to keep in place the plan to wind down its portfolio of debt securities accumulated during the quantitative easing programmes. The European Central Bank (ECB) hasn t made any alteration to the course of its monetary policy during the third quarter, in a context of consolidation of the economic recovery and the absence of inflationary pressures in the euro area. The stabilisation of the dollar, of long-term U.S. interest rates and of the financial situation of emerging markets allowed for a recovery of the equity markets in the US, with the respective key indices reaching new all-time highs in September, an evolution that contrasted with the debility of the European counterparts, which have been hurt by the strong devaluations recorded by the banking sector. In the interest rates domain, expectations that the rising trajectory of the Federal Reserve s key rates might extend into 2019 fuelled an increase of the yields of the US government bonds, with special acuteness in the shorter maturities, a development that ended up affecting, albeit in a rather mild fashion, European medium- and long-term interest rates. The expansionary stance of the fiscal policy of the new government of Italy continued to exert an upward pressure on the yields of Italian public debt, with contagion effects that proved quite limited to the Portuguese treasury bonds. The assurance given by the ECB officials that the Euro s key interest rates won t be raised until the summer of 2019 maintained the Euribor rates in negative territory for all the maturities. The Portuguese Economy continues to record growth rates above its potential level. According to Statistics Portugal, in the first half of 2018, the Portuguese GDP increased 2.3% in annual terms, driven by the expansion of private consumption and the on-going recovery of investment, amid the improvement in the levels of business confidence. As for external demand, exports continue to advance in a very favourable manner, supported by the vigour of the tourism sector and of the auto cluster. However, in net terms the contribution of external demand to GDP growth worsened in the first half of the year as imports rose more than exports. Against this background, the falling trajectory of the unemployment rate has intensified in the second quarter to levels not witnessed since 2004 (6.7%). For the whole year, the IMF foresees a growth of the Portuguese GDP of 2.3% and, in 2019, the expectation is that the economy s rate of expansion decelerates to 1.8%, in a climate marked by slowing external demand and of deceleration of private consumption, after the strong growth observed in the latest quarters. In Poland, the economic climate continues to be characterised by a strong dynamism of aggregate demand, with GDP growing 5.0% in the first half of the year compared to the same period of last year. The robustness of consumption, in a setting of rising households disposable incomes and increasing investment fed by the European Union structural funds have been the main drivers of economic activity. In terms of foreign exchange, in the third quarter the Zloty appreciated against the Euro, benefiting from a greater stability of international financial markets. The Mozambican Economy has been showing moderate levels of GDP growth, which together with reduced inflationary pressures has allowed the central bank to keep in place the expansionary cycle started in mid According to the IMF, the Mozambican economy should continue to recover gradually, with GDP growth expected at 3.5% in 2018 and 4.0% in In the third quarter, the Metical deprecated, thereby interrupting the appreciation trajectory recorded in the preceding months. In Angola, the IMF revised downward its forecasts for economic growth in 2018, from 2.2% to -0.1%, but anticipates that in 2019 the GDP rate of expansion will reach 3.1%. 14/23

15 CONSOLIDATED INDICATORS, ACTIVITY IN PORTUGAL AND INTERNATIONAL ACTIVITY Sep. 18 Sep. 17 Change 18/17 Sep. 18 Sep. 17 Change 18/17 Consolidated Activity in Portugal International activity Sep. 18 Sep. 17 Change 18/17 INCOME STATEMENT Net interest income 1, , % % % Dividends from equity instruments % % % Net fees and commission income % % % Net trading income % % % Other net operating income (90.3) (97.0) 6.9% (45.6) (53.7) 15.0% (44.7) (43.3) -3.2% Equity accounted earnings % % % Net operating revenues 1, , % % % Staff costs % % % Other administrative costs % % % Depreciation % % % Operating costs % % % Operating costs excluding specific items % % % Profit before impairment and provisions % % % Loans impairment (net of recoveries) % % % Other impairment and provisions % % >200% Profit before income tax % (3.6) >200% % Income tax % 42.8 (0.9) >200% % Income after income tax from continuing operations % (2.7) >200% % Income arising from discontinued operations % - - Non-controlling interests % (6.3) (3.5) -81.8% % Net income % >200% % BALANCE SHEET AND ACTIVITY INDICATORS Total assets 73,745 72, % 53,364 53, % 20,381 19, % Total customer funds (1) 72,786 68, % 53,171 50, % 19,614 18, % Balance sheet customer funds 54,922 52, % 38,625 36, % 16,297 15, % Deposits and other resources from customers 53,624 50, % 37,427 35, % 16,198 15, % Debt securities 1,298 1, % 1,198 1, % % Off-balance sheet customer funds 17,863 16, % 14,547 13, % 3,317 3, % Assets under management 5,291 4, % 3,058 2, % 2,233 2, % Assets placed w ith customers 4,151 3, % 3,595 3, % % Insurance products (savings and investment) 8,421 8, % 7,893 7, % % Loans to customers (gross) 51,150 50, % 37,629 37, % 13,521 12, % Individuals 27,604 27, % 19,148 19, % 8,456 7, % Mortgage 23,640 23, % 17,141 17, % 6,499 6, % Consumer and others 3,965 3, % 2,008 2, % 1,957 1, % Companies 23,546 23, % 18,481 18, % 5,066 4, % CREDIT QUALITY Total overdue loans 2,566 3, % 2,213 2, % % Overdue loans by more than 90 days 2,462 3, % 2,175 2, % % Overdue loans by more than 90 days / Loans to customers 4.8% 6.1% 5.8% 7.4% 2.1% 2.4% Total impairment (balance sheet) 3,206 3, % 2,684 2, % % Total impairment (balance sheet) / Loans to customers 6.3% 6.7% 7.1% 7.7% 3.9% 3.6% Total impairment (balance sheet) /Overdue loans by more than 90 days 130.3% 108.9% 123.4% 104.5% 182.1% 150.8% Non-Performing Exposures 6,307 8, % 5,546 7, % % Non-Performing Exposures / Loans to customers 12.3% 15.9% 14.7% 18.9% 5.6% 7.1% Restructured loans 3,934 4, % 3,390 3, % % Restructured loans / Loans to customers 7.7% 8.9% 9.0% 10.4% 4.0% 4.3% Cost of risk (net of recoveries, in b.p.) Cost-to-income (2) 45.4% 45.1% 46.3% 45.7% 44.1% 44.0% (1) As at 30 June 2018, the concepts underlying the determination of off-balance sheet customer funds w ere adjusted to reflect the new legal and regulatory framew ork imposed by the Financial Instruments Markets Directive II (MiFID II), as w ell as changes implemented regarding the perimeter considered and the criteria adopted, namely w ith regard to the inclusion of amounts held by customers in the context of the placement of third-party products that contribute to the recognition of commissions ("assets placed w ith customers"). The information w ith reference to 30 September 2017 is presented according to the new criteria. (2) Excludes the impact of specific itens. 15/23

16 BANCO COMERCIAL PORTUGUÊS INTERIM CONDENSED CONSOLIDATED INCOME STATEMENTS FOR THE NINE MONTHS PERIODS ENDED 30 SEPTEMBER 2018 AND SEPTEMBER 2018 (Thousands of euros) 30 SEPTEMBER 2017 (*) Interest income 1,407,861 1,431,812 Interest expense (355,056) (408,610) NET INTEREST INCOME 1,052,805 1,023,202 Dividends from equity instruments 592 1,686 Net fees and commissions income 510, ,640 Net gains / (losses) from financial operations at fair value through profit or loss 12,315 17,848 Net gains / (losses) from foreign exchange 53,846 63,402 Net gains / (losses) from hedge accounting operations (1,547) (6,672) Net gains / (losses) from derecognition of assets and financial liabilities at amortised cost (21,598) (3,927) Net gains / (losses) from derecognition of financial assets at fair value through other comprehensive income 46,560 n.a. Net gains / (losses) from financial assets available for sale n.a. 44,348 Net gains / (losses) from insurance activity 4,001 3,668 Other operating income / (losses) (121,592) (102,147) TOTAL OPERATING INCOME 1,535,450 1,536,048 Staff costs 435, ,118 Other administrative costs 275, ,764 Amortizations and depreciations 42,896 39,715 TOTAL OPERATING EXPENSES 754, ,597 OPERATING NET INCOME BEFORE PROVISIONS AND IMPAIRMENTS 781, ,451 Impairment for financial assets at amortised cost (335,668) (458,594) Impairment for financial assets at fair value through other comprehensive income 3,643 n.a. Impairment for financial assets available for sale n.a. (48,485) Impairment for other assets (68,398) (103,046) Other provisions (30,928) (18,378) NET OPERATING INCOME 349, ,948 Share of profit of associates under the equity method 71,868 56,791 Gains / (losses) arising from sales of subsidiaries and other assets 27,255 1,459 NET INCOME BEFORE INCOME TAXES 448, ,198 Income taxes Current (77,550) (82,831) Deferred (31,955) 19,720 INCOME AFTER INCOME TAXES FROM CONTINUING OPERATIONS 339, ,087 Income arising from discontinued or discontinuing operations 1,750 1,250 NET INCOME AFTER INCOME TAXES 341, ,337 Net income for the period attributable to: Bank's Shareholders 257, ,309 Non-controlling interests 83,773 76,028 NET INCOME FOR THE PERIOD 341, ,337 Earnings per share (in Euros) Basic Diluted (*) The balances for the nine months period ended 30 September 2017, correspond to the statutory accounts at that date. These balances are presented exclusively for comparative purposes and have not been restated follow ing the adoption of IFRS 9, w ith reference to 1 January 2018, as allow ed by IFRS 9. 16/23

17 BANCO COMERCIAL PORTUGUÊS INTERIM CONDENSED CONSOLIDATED BALANCE SHEET AS AT 30 SEPTEMBER 2018 AND 2017 AND 31 DECEMBER 2017 ASSETS 30 SEPTEMBER DECEMBER 2017 (*) (Thousands of euros) 30 SEPTEMBER 2017 (*) Cash and deposits at Central Banks 2,192,517 2,167,934 2,144,795 Loans and advances to credit institutions repayable on demand 330, ,532 1,113,371 Financial assets at amortised cost Loans and advances to credit institutions 868,186 1,065, ,331 Loans and advances to customers 45,355,357 45,625,972 45,199,645 Debt instruments 3,347,745 2,007,520 2,167,534 Financial assets at fair value through profit or loss Financial assets held for trading 1,024, , ,677 Financial assets not held for trading mandatorily at fair value through profit or loss 1,405,460 n.a. n.a. Financial assets designated at fair value through profit or loss 32, , ,253 Financial assets at fair value through other comprehensive income 12,063,815 n.a. n.a. Financial assets available for sale n.a. 11,471,847 11,914,693 Financial assets held to maturity n.a. 411, ,278 Assets w ith repurchase agreement 15,531-70,959 Hedging derivatives 76, , ,322 Investments in associated companies 488, , ,807 Non-current assets held for sale 1,940,000 2,164,567 2,286,122 Investment property 12,020 12,400 14,234 Other tangible assets 484, , ,975 Goodw ill and intangible assets 168, , ,560 Current tax assets 12,892 25,914 7,583 Deferred tax assets 2,945,304 3,137,767 3,135,169 Other assets 980,005 1,052,024 1,207,424 TOTAL ASSETS 73,744,606 71,939,450 72,989,732 LIABILITIES Financial liabilities at amortised cost Resources from credit institutions 7,563,524 7,487,357 9,185,514 Resources from customers 50,760,519 48,285,425 47,825,589 Non subordinated debt securities issued 1,707,696 2,066,538 2,187,133 Subordinated debt 1,097,692 1,169, ,167 Financial liabilities at fair value through profit or loss Financial liabilities held for trading 310, , ,807 Financial liabilities at fair value through profit or loss 3,831,932 3,843,645 3,773,817 Hedging derivatives 170, , ,295 Provisions 331, , ,989 Current tax liabilities 4,742 12,568 8,835 Deferred tax liabilities 4,993 6,030 2,235 Other liabilities 1,015, ,493 1,071,303 TOTAL LIABILITIES 66,799,954 64,759,714 65,931,684 EQUITY Share capital 5,600,738 5,600,738 5,600,738 Share premium 16,471 16,471 16,471 Preference shares 59,910 59,910 59,910 Other equity instruments 2,922 2,922 2,922 Legal and statutory reserves 264, , ,806 Treasury shares (291) (293) (282) Reserves and retained earnings (393,211) (38,130) (13,995) Net income for the period attributable to Bank's Shareholders 257, , ,309 TOTAL EQUITY ATTRIBUTABLE TO BANK'S SHAREHOLDERS 5,808,616 6,080,815 6,051,879 Non-controlling interests 1,136,036 1,098,921 1,006,169 TOTAL EQUITY 6,944,652 7,179,736 7,058,048 73,744,606 71,939,450 72,989,732 (*) The balances as at 31 December 2017 and 30 September 2017, correspond to the statutory accounts at that date. These balances are presented exclusively for comparative purposes and have not been restated follow ing the adoption of IFRS 9, w ith reference to 1 January 2018, as allow ed by IFRS 9. 17/23